The court upheld the transfer order under Section 127(2) of the Income Tax Act, confirming its reasoned nature and the existence of agreement between jurisdictional Commissioners.

JUDGMENT

M. S. Sonak, J.

1. Heard learned counsel for the parties.

2. This petition challenges the order dated 22 February 2023, made under Section 127 (2) of the Income Tax Act, 1961, transferring the petitioner’s case from the jurisdictional officer in Mumbai to the counterpart in New Delhi.

3. Mr. Shah, learned counsel for the petitioner, urges two contentions supporting this petition. Firstly, he submitted that the impugned order is bereft of reasons. He pointed out that the requirement to give reason, apart from one of the essential facets of principles of natural justice, is a statutory requirement under Section 127 (2) (a) of the Income Tax Act,1961. In the absence of reasons, he submitted, the impugned order calls for interference.

4. Secondly, Mr. Gandhi submitted that there was no agreement between the Principal Commissioners of Mumbai and Delhi for the proposal of such a transfer. Again, he submitted that such agreement is a sine qua non for exercising powers under Section 127 (2) of the Income Tax Act and in the absence of such agreement, the impugned order becomes vulnerable.

5. Mr. Shah referred us to some of the documents on record to submit that the respondents’ consent case was incorrect and was riddled with inconsistencies. He also relied upon the Supreme Court's decision in the case of Noorul Islam Educational Trust vs. Commissioner of Income Tax-I, (2016) 76 taxmann.com 144 (SC) in an attempt to make good his argument.

6. Mr. Subir Kumar, learned counsel for the respondents, defended the impugned order based on the reasoning reflected therein. He pointed out that there was full compliance with principles of natural justice and that the impugned order contained sufficient and cogent reasons. He pointed out that there was an agreement between two Commissioners, and this position is reflected in the documents on record, of which necessary cognisance has been taken in the impugned order. He submitted that a fair and transparent procedure was followed, and this transfer is not restricted only to the petitioner but, in all, to about 46 assessees who had transactions with the “Pacific Group.” He submitted that the coordinated and centralised investigation was imperative in this matter; therefore, there was no warrant to interfere with the impugned order.

7. The rival contentions now fall for our consideration.

8. Section 127 (2) of the Income Tax Act is relevant in the context of the challenge raised in this petition and, therefore, we transcribe this provision for the convenience of reference:-

“127. Power To Transfer Cases -

(1) ………..

(2) Where the Assessing Officer or Assessing Officers from whom the case is to be transferred and the Assessing Officer or Assessing Officers to whom the case is transferred are not subordinate to the same [Principal Director General or) Director General] or [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner,-

(a) where the [Principal Directors General or] Directors General or [Principal Chief Commissioners or] Chief Commissioners or [Principal Commissioners or] Commissioners to whom such Assessing Officers are subordinate are in agreement, then the [Principal Director General or] Director General or [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner from whose jurisdiction the case is to be transferred may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, pass the order;

(b) where the [Principal Directors General or] Directors General or [Principal Chief Commissioners or] Chief Commissioners or [Principal Commissioners or] Commissioners aforesaid are not in agreement, the order transferring the case may, similarly, be passed by the Board or any such [Principal Director General or] Director General or [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissione